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RICS reveals true cost of home insurance

20 June 2005

The Royal Institute of Chartered Surveyors (RICS) is warning homeowners to remember the true cost of home insurance.

A new cost calculator from the RICS' Building Cost Information Service (BCIS) allows homeowners to calculate approximately how much it would cost to rebuild their house if it were destroyed by fire or an act of God.

One of the intentions of the BCIS' calculator is to remind people that the cost of home insurance is based on how much it would cost to rebuild a property, rather than how much it is currently worth.

"Many people will find they are paying too little house insurance and some may find they are paying too much. Few people realise that insurance on buildings is driven by construction inflation rather than market prices," said Joe Martin, director of the BCIS.

"Rebuild cost are not always proportionate to size and market value. It is possible that a highly valued, new-build house in Mayfair will need to be insured for less than a Victorian terrace in Bridlington."

Jane Milne from the Association of British Insurers (ABI) also emphasised the importance of using the correct rebuild valuation to calculate home insurance.

"It is vital that the correct rebuilding valuation is used when buying insurance to make sure any claim can be paid in full," Ms Milne stated.